There’s a big difference with what you can do between these two setups:
With cloud systems, all the headache of backups and performance may go away. But the price you pay is having no direct access to your database – which means no custom reports. All you can do is use the built in report writer – if there is one. In Xero for example, which is all cloud based, the reporting options are very limited. If you want complete control, you need to be on-premise.